THE SANDIGANBAYAN’S May 9 resolution upholding the controversial plea bargain agreement that ex-military comptroller Carlos F. Garcia entered into with then Ombudsman Merceditas Gutierrez is a model of judicial obtuseness. As we can see for ourselves in both the language and the reasoning they used, the judges in the majority were so determined to willfully ignore the greater context and the higher purposes of the law that they ended up burrowing their head in the sand—and looking stupid.

While the resolution is attributed to the anti-graft court’s Second Division, it was in fact a “Special Division of Five” that reached the unfortunate conclusion. Since the three-person Second Division was divided on the issues of the case, the Special Division was created to resolve the matter; it did, by a close 3-2 vote—and by the narrowest of judicial reasons.

Essentially, the resolution in the Garcia case centered on Garcia’s compliance with the terms of the plea bargain agreement. About half of the resolution’s 22 pages was used to list the various properties and bank accounts held by Garcia and members of his family. On Page 17 we read: “It therefore appears from the foregoing that the transfer in the name of the Republic of the Philippines of the assets and properties of accused Maj. Gen. Garcia subject of the Plea Bargaining Agreement, in the total amount of P135,433,387.84, had already been accomplished.” Two pages later, we read: “Inasmuch as the provisions of the Plea Bargaining Agreement and the concerns of this Court about the protection of the Government have been already fully addressed, there is no reason why this Court should withhold approval of the Plea Bargaining Agreement in these cases.”

In fact, there are several reasons why the plea bargain should not have been approved, and why the Sandiganbayan should reconsider its ruling. Compliance with the terms of the agreement cannot be the primary consideration, when the agreement is itself the issue at stake. The protection of the government cannot be understood in the narrowest terms of securing property and other assets; the highest purpose of the anti-graft court is to punish grafters and prevent corruption. How can a plea bargain that allows a military official with hundreds of millions in unexplained wealth to keep half of it serve as both punishment and preventive measure?

Above all, in ignoring the greater context, the anti-graft court succeeded in making itself an accomplice of the corrupt. From the unusual circumstances of the plea bargain (struck only after an uncooperative special prosecutor retired), to the smoking-gun confession of Garcia’s wife Clarita (the subject of apparently intense internal debate in the court), to the revelations disclosed in hearings at the Senate and the House of Representatives (including evidence from the Anti-Money Laundering Council showing that Garcia’s wealth may have reached over P700 million), to the obvious discrepancy between Garcia’s official income and his unexplained riches (the only instance when the law puts the burden of proof on the accused, not the accuser), there was an entire range of old and new evidence that the anti-graft court could have taken notice of, but chose not to see. President Aquino was only right to ask whether the judges lived in a vacuum.

One gauge of the resolution’s strained reasoning is when it reiterated the court’s earlier ruling that there was no need for the AFP to give its consent to the plea bargain, in part because “the blatant allegations in the information fail to indicate that the amount mentioned therein was purportedly taken from the AFP, as in fact none from the said agency was listed therein as a witness.” This is plainly ridiculous; the facts of the case show that much of the money involved came from suppliers’ bribes. But while the funds did not necessarily come from the AFP, the bribes were made precisely because, at the time, Garcia was the AFP’s comptroller. In other words, the abuse happened as a direct result of the office Garcia held; if we want the AFP to reform itself, surely it must have a say on how an officer who abused his office must be meted justice.

A once-secret plea bargain that allows Garcia to pocket over a hundred million pesos is many things, but it isn’t justice.

April 2011 Philippine Supreme Court Decisions on Commercial Law

Here are selected April 2011 rulings of the Supreme Court of the Philippines on commercial law:

Insurance; presentation of policy as a condition for recovery by insurance company. The presentation in evidence of the marine insurance policy is not indispensable before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its subrogatory right. The subrogation receipt, by itself, is sufficient to establish the amount paid to settle the insurance claim. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim. In International Container Terminal Services, Inc. v. FGU Insurance Corporation, the Supreme Court explained:

Indeed, jurisprudence has it that the marine insurance policy needs to be presented in evidence before the trial court or even belatedly before the appellate court. In Malayan Insurance Co., Inc. v. Regis Brokerage Corp., the Court stated that the presentation of the marine insurance policy was necessary, as the issues raised therein arose from the very existence of an insurance contract between Malayan Insurance and its consignee, ABB Koppel, even prior to the loss of the shipment. In Wallem Philippines Shipping, Inc. v. Prudential Guarantee and Assurance, Inc., the Court ruled that the insurance contract must be presented in evidence in order to determine the extent of the coverage. This was also the ruling of the Court in Home Insurance Corporation v. Court of Appeals.

However, as in every general rule, there are admitted exceptions. In Delsan Transport Lines, Inc. v. Court of Appeals, the Court stated that the presentation of the insurance policy was not fatal because the loss of the cargo undoubtedly occurred while on board the petitioner’s vessel, unlike in Home Insurance in which the cargo passed through several stages with different parties and it could not be determined when the damage to the cargo occurred, such that the insurer should be liable for it.

As in Delsan, there is no doubt that the loss of the cargo in the present case occurred while in petitioner’s custody. Moreover, there is no issue as regards the provisions of Marine Open Policy No. MOP-12763, such that the presentation of the contract itself is necessary for perusal, not to mention that its existence was already admitted by petitioner in open court. And even though it was not offered in evidence, it still can be considered by the court as long as they have been properly identified by testimony duly recorded and they have themselves been incorporated in the records of the case.

Similarly, in this case, the presentation of the insurance contract or policy was not necessary. Asian Terminals, Inc. v. Malayan Insurance, Co., Inc., G.R. No. 171406, April 4, 2011.

SEC. 30. When judgment becomes final; duty to cause issuance of decree. – The judgment rendered in a land registration proceedingbecomes final upon the expiration of thirty days[8] to be counted from the date of receipt of notice of the judgment. An appeal may be taken from the judgment of the court as in ordinary civil cases.

After judgment has become final and executory, it shall devolve upon the court to forthwith issue an order in accordance with Section 39 of this Decree to the Commissioner for the issuance of the decree of registration and the corresponding certificate of title in favor of the person adjudged entitled to registration. (Emphasis supplied)

In a registration proceeding instituted for the registration of a private land, with or without opposition, the judgment of the court confirming the title of the applicant or oppositor, as the case may be, and ordering its registration in his name constitutes, when final, res judicata against the whole world.[9]It becomes final when no appeal within the reglementary period is taken from a judgment of confirmation and registration.[10]

The land registration proceedings being in rem, the land registration court’s approval in LRC No. N-983 of spouses Diego Lirio and Flora Atienza’s application for registration of the lot settled its ownership, and is binding on the whole world including petitioner.

Explaining his position that the December 10, 1976 Decision in LRC No. N-983 had become “extinct,” petitioner advances that the LRA has not issued the decree of registration, a certain Engr. Rafaela Belleza, Chief oftheSurveyAssistanceSection, LandManagement Services, Department of Environment and Natural Resources (DENR), Region 7, Cebu City having claimed that the survey of the Cebu CadastralExtension is erroneous and all resurvey within the Cebu Cadastral extensionmustfirstbe approved by theLand Management Services of the DENR, Region 7, Cebu City before said resurvey may be used in court; and that the spouses Lirio did not comply with the said requirement for they instead submitted to the court a mere special work order.[11]

There is, however, no showing that the LRA credited the alleged claim of Engineer Belleza and that it reported such claim to the land registration court for appropriate action or reconsideration of the decision which was its duty.

Petitioners insist that the duty of the respondent land registration officials to issue the decree is purely ministerial. It is ministerial in the sense that they act under the orders of the court and the decree must be in conformity with the decision of the court and with the data found in the record, and they have no discretion in the matter. However, if they are in doubt upon any point in relation to the preparation and issuance of the decree, it is their duty to refer the matter to the court. They act, in this respect, as officials of the court and not as administrative officials, and their act is the act of the court.They are specifically called upon to “extend assistance to courts in ordinary and cadastral land registration proceedings.”[12] (Emphasis supplied)

As for petitioner’s claim that under Section 6, Rule 39 of the Rules of Court reading:

SEC. 6. Execution by motion or by independent action. – A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is barred by the statute of limitations,ajudgmentmaybeenforcedbyaction.The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action beforeitisbarred by the statute of limitations[,]

the December 10, 1976 decision became “extinct” in light of the failure of respondents and/or of their predecessors-in-interest to execute the same within the prescriptive period, the same does not lie.

THAT THE LOWER COURT ERRED IN ORDERING THAT THE DECISION RENDERED IN THIS LAND REGISTRATION CASE ON NOVEMBER 28, 1931 OR TWENTY SIX YEARS AGO, HAS NOT YET BECOME FINAL AND UNENFORCEABLE.

We fail to understand the arguments of the appellant in support of the above assignment, except in so far as it supports his theory that after a decision in a land registration case has become final, it may not be enforced after the lapse of a period of 10 years, except by another proceeding to enforce the judgment or decision. Authority for this theory is the provision in the Rules of Court to the effect that judgment may be enforced within 5 years by motion, and after five years but within 10 years, by an action (Sec. 6, Rule 39.) This provision of the Rules refers to civil actions and is not applicable to special proceedings, such as a land registration case. This is so because a party in a civil action must immediately enforce a judgment that is secured as against the adverse party, and his failure to act to enforce the same within a reasonable time as provided in the Rules makes the decision unenforceable against the losing party. In special proceedings the purpose is to establish astatus,condition orfact;in land registration proceedings, the ownership by a person of a parcel of land is sought to be established.Afterthe ownership has been proved and confirmed by judicial declaration, no further proceeding to enforce said ownership is necessary, except when the adverse or losing party had been in possession of the land and the winning party desires to oust him therefrom.

Furthermore, there is no provision in the Land Registration Act similar to Sec. 6, Rule 39, regarding the execution of a judgment in a civil action, except the proceedings to place the winner in possession by virtue of a writ of possession. The decision in a land registration case, unless the adverse or losing party is in possession, becomes final without any further action, upon the expiration of the period for perfecting an appeal.

[8]The first paragraph of Section 39 of B.P. Blg. 129 or The Judiciary Reorganization Act OF 1980 provides:

SEC. 39. Appeals. – The period for appeal from final orders, resolutions, awards, judgments, or decisions of any court in all cases shall be fifteen (15) days counted from the notice of the final order, resolution , award, judgment, or decision appealed from: Provided, however, That in habeas corpus cases, the period for appeal shall be forty-eight (48) hours from the notice of the judgment appealed from.

[9]Noblejas and Noblejas, Registration Of Land Titles And Deeds 136 (1992 ed.)

Petitioners submit that the decision of the CA is not in consonance with the Court’s decision in the case of Rexlon Realty Group Inc. v. Court of Appeals.[17]In their petition, petitioners state that:

In the said case the Supreme Court ruled in favor of the Petitioner and GRANTED the Petition for Review filed by the Petitioner, it reversed and set aside the assailed Decision of the Court of Appeals dismissing the Petition for Annulment of Judgment and the Decision of the Regional Trial Court of Cavite (w)as ANNULLED; declaring void the new owner’s duplicate copies of TCT Nos. T-72537 and T-72538 in the name of Alex L. David issued by virtue of the said Decision of the Regional Trial Court as well as the replacement thereof and explained its decision as follows:

In the case of Strait Times, Inc. v. Court of Appeals, where this Court was faced with the same facts and issue, therein respondent Peñalosa filed a petition for the issuance of a new owner’s duplicate certificate of title.He alleged therein that his copy was lost and was not pledged or otherwise delivered to any person or entity to guaranty any obligation or for any purpose.When the trial court issued a new owner’s duplicate title, therein petitioner Strait Times, Inc filed a petition to annul judgment based on extrinsic fraud and lack of jurisdiction.Strait Times, Inc. claimed that Peñalosa misrepresented before the trial court that the said owner’s duplicate copy of the title was lost when in fact it was in the possession of the former pursuant to a contract of sale between Peñalosa and a certain Conrado Callera.Callera later sold the lot represented by the alleged lost title to therein petitioner Strait Times, Inc.

We ruled therein, as we now rule in the case at bar, that extrinsic fraud did not attend the proceedings before the trial court for the reason that:

xxxIt is well-settled that the use of forged instrument or perjured testimonies during trial is not an extrinsic fraud, because such evidence does not preclude the participation of any party in the proceedings.While a perjured testimony may prevent a fair and just determination of a case, it does not bar the adverse party from rebutting or opposing the use of such evidence. Furthermore, it should be stressed that extrinsic fraud pertains to an act committed outside of the trial. The alleged fraud in this case was perpetrated during the trial.

x x x

However, in consonance with the Strait Times case, respondent Davids’ act of misrepresentation, though not constituting extrinsic fraud, is still an evidence of absence of jurisdiction. In the Strait Times case and in Demetriou v. Court of Appeals, also on facts analogous to those involved in this case, we held that if an owner’s duplicate copy of a certificate of title has not been lost but is in fact in possession of another person, the reconstituted title is void and the court rendering the decision has not acquired jurisdiction. Consequently, the decision may be attacked any time. In the case at bar, the authenticity and genuineness of the owner’s duplicate of TCT Nos. T-52537 and T-52538 in the possession of petitioner Rexlon and the Absolute Deed of Sale in its favor have not been disputed. As there is no proof to support actual loss of the said owner’s duplicate copies of said certificates of title, the trial court did not acquire jurisdiction and the new titles issued in replacement thereof are void.[18]

The petition has merit.

The present case is on all fours with the Strait Times case, in that the trial court could not have validly acquired jurisdiction to reconstitute the alleged lost owner’s duplicate copy of TCT No. T-16156 since the same was not lost but was in the possession of petitioners who had purchased the property from its late owner.

Such being the case, the Order of the trial court dated March 27, 2001 directing the reconstitution could not have become final and executory, it being void for lack of jurisdiction.

WHEREFORE, the petition is GRANTED and the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 70560 are REVERSED and SET ASIDE.The Order of the Regional Trial Court of Iba, Zambales dated March 27, 2001 is DECLARED NULL and VOID for lack of jurisdiction.

Petitioner contends that the Court of Appeals erred in declaring the donation null and void for the reason that the acceptance was not allegedly done in accordance with Articles 745[1] and 749[2] of the New Civil Code.

We agree.

Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2) remuneratory or compensatory; (3) conditional or modal; and (4) onerous.A pure or simple donation is one where the underlying cause is plain gratuity.[3] This is donation in its truest form. On the other hand, a remuneratory or compensatory donation is one made for the purpose of rewarding the donee for past services, which services do not amount to a demandable debt.[4] A conditional or modal donation is one where the donation is made in consideration of future services or where the donor imposes certain conditions, limitations or charges upon the donee, the value of which is inferior than that of the donation given.[5] Finally, an onerous donation is that which imposes upon the donee a reciprocal obligation or, to be more precise, this is the kind of donation made for a valuable consideration, the cost of which is equal to or more than the thing donated.[6]

Of all the foregoing classifications, donations of the onerous type are the most distinct.This is because, unlike the other forms of donation, the validity of and the rights and obligations of the parties involved in an onerous donation is completely governed not by the law on donations but by the law on contracts.In this regard, Article 733 of the New Civil Code provides:

Art. 733. Donations with an onerous cause shall be governed by the rules on contracts, and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed.

The donation involved in the present controversy is one which is onerous since there is a burden imposed upon the donee to build a school on the donated property.[7]

The Court of Appeals held that there was no valid acceptance of the donation because:

xxx

Under the law the donation is void if there is no acceptance.The acceptance may either be in the same document as the deed of donation or in a separate public instrument.If the acceptance is in a separate instrument, "the donor shall be notified thereof in an authentic form, and his step shall be noted in both instruments.

"Title to immovable property does not pass from the donor to the donee by virtue of a deed of donation until and unless it has been accepted in a public instrument and the donor duly noticed thereof.(Abellera vs. Balanag, 37 Phils. 85; Alejandro vs. Geraldez, 78 SCRA 245).If the acceptance does not appear in the same document, it must be made in another.Solemn words are not necessary; it is sufficient if it shows the intention to accept, But in this case, it is necessary that formal notice thereof be given to the donor and the fact that due notice has been given it must be noted in both instruments (that containing the offer to donate and that showing acceptance).Then and only then is the donation perfected. (11 Manresa 155-11, cited in Vol. II, Civil Code of the Philippines by Tolentino.)."

This Court perused carefully the Deed of Donation marked as exhibit "A" and "1" to determine whether there was acceptance of the donation.This Court found none.We further examined the record if there is another document which embodies the acceptance, we found one.Although the Court found that in the offer of exhibits of the defendants, a supposed affidavit of acceptance and/or confirmation of the donation, marked as exhibit "8" appears to have been offered.

However, there is nothing in the record that the exhibits offered by the defendants have been admitted nor such exhibits appear on record.

Assuming that there was such an exhibit, the said supposed acceptance was not noted in the Deed of Donation as required under Art. 749 of the Civil Code.And according to Manresa, supra, a noted civilist, the notation is one of the requirements of perfecting a donation.In other words, without such a notation, the contract is not perfected contract.Since the donation is not perfected, the contract is therefore not valid.[8]

xxx

We hold that there was a valid acceptance of the donation.

Sections 745 and 749 of the New Civil Code provide:

ART. 745.The donee must accept the donation personally, or through an authorized person with a special power for the purpose, or with a general and sufficient power; otherwise the donation shall be void.

ART. 749.In order that the donation of an immovable may be laid, it must be made in a public document, specifying therein the property donated and the value of the charge which the donee must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments.

Private respondents, as shown above, admit that in the offer of exhibits by the defendants in the trial court, an affidavit of acceptance and/or confirmation of the donation, marked as Exhibit "8," was offered in evidence.However, private respondents now question this exhibit because, according to them "there is nothing in the record that the exhibits offered by the defendants have been admitted nor such exhibit appear on record."

Respondents' stance does not persuade.The written acceptance of the donation having been considered by the trial court in arriving at its decision, there is the presumption that this exhibit was properly offered and admitted by the court.

Moreover, this issue was never raised in the Court of Appeals.Nowhere in their brief did respondents question the validity of the donation on the basis of the alleged defect in the acceptancethereof.If there was such a defect, why did it take respondents more than ten (10) years from the date of the donation to question its validity?In the very least, they are guilty of estoppel.[9]

Respondents further argue that assuming there was a valid acceptance of the donation, the acceptance was not noted in the Deed of Donation as required in Article 749 of the Civil Code, hence, the donation is void.

The purpose of the formal requirement for acceptance of a donation is to ensure that such acceptance is duly communicated to the donor.Thus, in Pajarillo vs. Intermediate Appellate Court,[10] the Court held:

There is no question that the donation was accepted in a separate public instrument and that it was duly communicated to the donors.Even the petitioners cannot deny this.But what they do contend is that such acceptance was not "noted in both instruments," meaning the extrajudicial partition itself and the instrument of acceptance, as required by the Civil Code.

That is perfectly true.There is nothing in either of the two instruments showing that "authentic notice" of the acceptance was made by Salud to Juana and Felipe.And while the first instrument contains the statement that "the donee does hereby accept this donation and does hereby express her gratitude for the kindness and liberality of the donor,"the only signatories thereof were Felipe Balane and Juana Balane de Suterio.That was in fact the reason for the separate instrument of acceptance signed by Salud a month later.

A strict interpretation of Article 633 can lead to no other conclusion that the annulment of the donation for being defective in form as urged by the petitioners.This would be in keeping with the unmistakable language of the above-quoted provision.However, we find that under the circumstances of the present case, a literal adherence to the requirement of the law might result not in justice to the parties but conversely a distortion of their intentions.It is also a policy of the Court to avoid such as interpretation.

The purpose of the formal requirement is to insure that the acceptance of the donation is duly communicated to the donor.In the case at bar, it is not even suggested that Juana was unaware of the acceptance for she in fact confirmed it later and requested that the donated land be not registered during her lifetime by Salud.Given this significant evidence, the Court cannot in conscience declare the donation ineffective because there is no notation in the extrajudicial settlement of the donee's acceptance.That would be placing too much stress on mere form over substance.It would also disregard the clear reality of the acceptance of the donation as manifested in the separate instrument dated June 20, 1946, and as later acknowledged by Juan.

In the case at bar, a school building was immediately constructed after the donation was executed.Respondents had knowledge of the existence of the school building put up on the donated lot through the efforts of the Parents-Teachers Association of Barangay Kauswagan.It was when the school building was being dismantled and transferred to the new site and when Vice-Mayor Wilfredo Palma was constructing a house on the donated property that respondents came to know of the Deed of Exchange.The actual knowledge by respondents of the construction and existence of the school building fulfilled the legal requirement that the acceptance of the donation by the donee be communicated to the donor.

On respondents' claim, which was upheld by the Court of Appeals, that the acceptance by BPS District Supervisor Gregorio Buendia of the donation was ineffective because of the absence of a special power of attorney from the Republic of the Philippines, it is undisputed that the donation was made in favor of the Bureau of Public Schools.Such being the case, his acceptance was authorized under Section 47 of the 1987 Administrative Code which states:

SEC. 47.Contracts and Conveyances. -Contracts or conveyances may be executed for and in behalf of the Government or of any of its branches, subdivisions, agencies, or instrumentalities, whenever demanded by the exigency or exigencies of the service and as long as the same are not prohibited by law.

Finally, it is respondents' submission that the donee, in exchanging the donated lot with a bigger lot, violated the condition in the donation that the lot be exclusively used for school purposes only.

What does the phrase "exclusively used for school purposes" convey? "School" is simply an institution or place of education.[11] "Purpose" is defined as "that which one sets before him to accomplish or attain; an end, intention, or aim, object, plan, project.Term is synonymous with the ends sought, an object to be attained, an intention, etc."[12] "Exclusive" means "excluding or having power to exclude (as by preventing entrance or debarring from possession, participation, or use); limiting or limited to possession, control or use.[13]

Without the slightest doubt, the condition for the donation was not in any way violated when the lot donated was exchanged with another one.The purpose for the donation remains the same, which is for the establishment of a school.The exclusivity of the purpose was not altered or affected.In fact, the exchange of the lot for a much bigger one was in furtherance and enhancement of the purpose of the donation.The acquisition of the bigger lot paved the way for the release of funds for the construction of Bagong Lipunan school building which could not be accommodated by the limited area of the donated lot.

x x x.

[1]Art. 745. The donee must accept the donation personally, or through an authorized person with a special power for the purpose, or with a general and sufficient power; otherwise the donation shall be void.

[2]Art. 749. In order that the donation of an immovable may be valid, it must be made in a public document, specifying therein the property donated and the value of the charge which the donee must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments.

[9]Estoppel by laches, or the negligence or omission to assert a right within a reasonable time, warrants a presumption that the party entitled to assert it either has abandoned it or declined to assert it (Ochagabra vs. CA,304 SCRA 587 (1999).